Much has been made of the so-called Great Resignation, measured by the number of workers quitting each month. Most of these workers accept new roles, whether full-time or part-time. But one thing that isn’t getting discussed as much is the huge numbers of early retirements and how that is impacting both the labor force and the larger economy. Let’s review how a Great Retirement may be impacting the current job market.
Huge numbers of Baby Boomers have retired since the beginning of the pandemic. In fact, 3 million MORE Baby Boomers retired in 2020 than in 2019, and these numbers continue to remain high. One area where this is noticed: airlines. It’s true that the pandemic caused pilot shortages due to the inability to obtain training and maintain required flight hours. It’s also true that mandatory retirement age (65) has forced a large number of pilots out of the workforce altogether.
What’s more, supply chain disruptions have also been made worse as huge numbers of experienced, long-haul truck drivers have retired with not nearly enough new drivers to replace them. Those of us who live in the Rust Belt are acutely aware of just how much *stuff* gets hauled by truck from the manufacturing heart of the USA to the left and right coasts.
Healthcare is another area where the average age of doctors and nurses is well above the average American worker age. These critical workers are overworked and burned out, and retiring faster than they can be replaced. In fact, it’s possible that the USA will be facing yet *another* nursing shortage in just 3 years according to McKinsey.
As workers retire, there are other economic impacts to consider. First, the reduction in income typically corresponds to a reduction in consumer spending. With a large number of Baby Boomers both purchasing fewer things and spending less on those purchases, there is likely to be some contraction in the overall economy. Spending on healthcare will increase as Boomers age and later-in-life medical issues tend to be more expensive. One area many Boomers are spending more is providing financial support to their adult children, particularly in the areas of student loan debt and housing. This is another way in which Boomers contribute less to the overall economy, and which will not be replaced by younger workers.